Mid-Day Oil Summary: Crude Edges Down

Crude markets have eased back slightly today but prices are holding near the highest since November awaiting details of Saudi Arabia and Russia plans for October output expected this week. Hopes that the US Fed has finished tightening and China efforts to stimulate the economy are also providing support.

• Brent NOV 23 down -0.7% at 88.36$/bbl
• WTI OCT 23 down -0.3% at 85.3$/bbl
• Gasoil SEP 23 up 1.2% at 933.5$/mt
• WTI-Brent up 0.01$/bbl at -3.82$/bbl
• Russia last week announced it has agreed on further actions with OPEC+ and will announce the steps this week while Saudi Arabia is expected to extend the existing 1mbpd production cuts. Previous monthly announcement by Saudi Arabia have taken place early in the month.
• OPEC+ production cuts have resulted in a large deficit of 2.3mbpd in Q3 according to Goldman Sachs. Three rounds of cuts by OPEC+, including a voluntary reduction by Saudi Arabia since Sep 2022 fully explain the market’s return to a deficit.
• Global oil demand is expected to grow by 2mbpd year on year in 2023 amid better-than-expected demand from the US and Europe, said Amrita Sen from Energy Aspects.
• The oil price rally since late June is at risk of a correction lower in the next six months as weakening demand takes over from supply cuts as the main market driver according to Gunvor.
• China’s refined oil exports in August were 3.14m mt, down 10k mt on the month due to a scarcity of available export quotas, according to OilChem.
• Asia will account for 64% of global oil demand growth in 2023 and 2024, said Kang Wu, global head of demand research at S&P Global, said, while the focus will be on affordability, heads of Asian energy companies said during APPEC.
• Gasoline and diesel spreads are seeing some support this week after gradually drifting lower over the previous week. Production of refined products in China reached a record high in August and has issued 12m tons of refined products quotas in its third batch for 2023. Diesel Exports from Russia’s Primorsk dropped in August, but remained well above the seasonal average.
• US weekly gasoline demand last week (Sun-Sat), the start of Labor Day weekend, increased by 0.2% from the week prior. GasBuddy measures gasoline demand at 8.88mbpd.
• US gasoline crack up 0.7$/bbl at 23.92$/bbl
• US ULSD crack up 1.2$/bbl at 47.19$/bbl